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Position statement

OTTAWA, April 3, 2014 —This statement summarizes the approach taken by the Competition Bureau in its review of the acquisition by CHS Inc. (CHS) of seven agri-product retail outlets and nine anhydrous ammonia businesses from Agrium Inc. (Agrium), pursuant to an agreement announced on March 17, 2014. The parties completed the transaction on April 1, 2014.

CHS is a global agri-business and the largest US cooperative owned by farmers, ranchers and local cooperatives. It serves nearly 600,000 producers through agri-operations in the US and Canada, in addition to energy, grain and food customers in 65 countries.

Overview of analysis

In approving the sale of the assets to CHS, the Bureau was satisfied that the sale met the criteria laid out in the Consent Agreement, namely that:

the sale of the assets did not raise issues with respect to its likely impact on competition;

CHS is fully independent of and operates at arm’s length from Agrium;

Agrium will have no direct or indirect interest in the assets to be sold following the sale;

CHS has the managerial, operational and financial capability to compete effectively in the retail supply of agri-products or anhydrous ammonia; and

CHS is committed to carrying on the businesses.

In order to assess the likely impact of the transaction on competition, the Bureau carried out a local market analysis for each of the relevant markets where the Consent Agreement was intended to address a substantial lessening of competition. This analysis was conducted in accordance with the approach used in the Agrium/Glencore matter and relied heavily on information and data obtained as part of the Bureau’s review of that matter.

Following this local market analysis, the Bureau concluded that it did not have any concerns regarding the likely impact of the sale of assets on competition. In summary, the Bureau found that CHS and the assets to be sold do not overlap in any local markets, with the exception of Vauxhall, Alberta, in which the overlap is minimal, the level of rivalry between the parties is low, and CHS will continue to face effective competition post-transaction.

Based on its review of CHS’ ownership structure, financial statements and securities filings, the Bureau was satisfied that CHS is fully independent of and operates at arm’s length from Agrium. Furthermore, given the firm’s extensive North American agri-operations, large revenue base and record of profitability, the Bureau was also satisfied that CHS has the managerial, operational and financial capability to compete effectively in the retail supply of agri-products and anhydrous ammonia. Inspection of the sale agreement between Agrium and CHS confirmed that Agrium will have no direct or indirect interest in the assets to be sold following the completion of the transaction.

In evaluating CHS’ commitment to carrying on the businesses, the Bureau obtained and reviewed business documents from CHS, in addition to speaking to members of the firm’s management team. In conducting its review, the Bureau gave particular weight to business plans and to the rigour with which CHS had assessed the assets to be sold.

Based on the above, the Bureau determined that the sale of the assets to CHS will preserve competition for the retail supply of nitrogen fertilizers to farmers in Alberta and Saskatchewan.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.

However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.